In the fall, many young adults are heading off to college. If you and your spouse have been saving for years for this event, you may wonder what will happen to the college savings plans if you divorce. Can your spouse or ex-spouse cash out all of the money, leaving your child with nothing for college?
There are two types of college savings plans:
- Prepaid tuition plans set up to allow an individual to prepay a student’s future tuition and fees at today’s rates
- College savings plans allowing individuals to contribute to an account established to pay a student’s qualified higher education expenses at any eligible educational institution.
How your college savings plan is dealt with in a divorce depends upon which type of college savings plan you have. Florida Prepaid College Plans are a type of prepaid tuition plan, and they allow only one account owner. If a parent unilaterally tries to cash out a prepaid plan before the child goes off to college, Florida law dictates that prepaid plans purchased after February 1, 2009 may only be cashed out early with the consent of both an owner and a listed survivor. If the prepaid plan was purchased prior to February 1, 2009, it’s possible for the owner to add a survivor and grant the survivor the right to refuse consent for a premature liquidation.
The sole owner of a Florida Prepaid College Plan may, however, choose to maintain unilateral control over the plan instead. If the spouse who is the sole owner of the prepaid plan purchased it with pre-marriage money, that spouse may retain ownership after a divorce. It may, however, be possible to seek a stipulation in the marital settlement agreement granting joint control to both parents.
The second type of college savings plan allows parents to establish joint control over the funds. Such plans can be divided in the event of a divorce much like other marital assets. The division of these assets can be planned for and dealt with in your marital settlement agreement.
If you are considering a divorce and want to protect your children’s college savings plans, our experienced Pinellas County family law firm can help you preserve these assets for your children’s benefit.